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NOTE 2– INITIAL PUBLIC
OFFERING:
On May 17, 2022,
the Company finalized its IPO offering of an aggregate of 4,212,500 shares of common stock, including the partial exercise by the underwriter
of its option to purchase 462,500 additional shares of common stock, at a price to the public of $4.00 per share.
The net proceeds
from the offering, including the over-allotment, to the Company were approximately $15.4 million, after deducting underwriting discounts,
commissions and expenses amounting to approximately $1.0 million.
As a result of the
IPO, the Company issued common stock in the transactions described below:
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a. |
Redeemable convertible preferred stock (see
Note 13)
- the Company issued 7,731,083 shares of common stock (on a one (1) for one (1) basis, pursuant to the conversion provisions
of the Series A and Series B redeemable Preferred Stock agreements). Upon the conversion, the Company reclassified the Convertible Preferred
stock at its carrying amount, from temporary equity, into shareholders’ equity.
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b. |
Convertible loan agreement (“CLA”) (see Note 11) – the Company issued 1,638,161
shares of common stock. pursuant to the conversion features of the loan agreement. |
Upon such issuance,
the Company reclassified the Convertible loan’s carrying amount (which reflected its then current fair value), into shareholders’
equity.
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c. |
Convertible notes (see Note 10) –The Company issued 900,096 shares of common stock pursuant
to the conversion features of the note agreements issued during December 2021 and April 2022. |
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d. |
Warrants (See Note 14): |
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1. |
The Company issued 617,567 shares of common stock as a result of the exercise provisions of the detachable
warrants granted to Mizrahi-Tefahot Bank as part of the Company’s financing agreement with Bank Mizrahi. |
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2. |
The Company issued 180,000 shares of common stock to Migdalor as a result of the exercise provisions of
the detachable warrants granted to Migdalor as part of the loan agreement with Migdalor. |
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3. |
In addition, concurrently with the IPO and in connection with the consummation of the IPO, the Company
issued common stock warrants to the underwriters. The warrants are exercisable into 294,875 of the Company’s common shares for an
exercise price of $5 per share and can be exercised at any time during a period of 5 years from the issuance date (i.e. until May 17,
2027). The warrants are classified as equity based on the guidance provided under ASC 718-10. |
As of the issuance
date of the underwriter warrants, the fair value of the warrants was estimated at $145. The valuation was based on a Black-Scholes option-pricing
model, using an expected volatility of 54%, a risk-free rate of 3.01%, a contractual term of 5 years, an expected dividend yield of 0%
and a stock price at the issuance date of $1.95.
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e. |
The Company redeemed 1,783,773 shares of non-voting common stock at their par value, removing the stock
from shareholders’ equity. |
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